The study is dedicated to the principles of Catholic investment. This spring, the work was submitted as a dissertation in the field of economic and social history (as a bridging discipline) to the Catholic University of Eichstätt-Ingolstadt and was evaluated as a very good work (magna cum laude). On the occasion of its publication by Nomos-Verlag in mid-November 2020, the author gives a brief overview of the work and highlights some key topics.
Introduction to the principles of Catholic Finance
The complex of questions concerning the guidelines for a value-based investment policy against the background of Catholic social teaching has so far received little attention in the literature. This neglect is surprising, since not only the financial assets of the Catholic Church are receiving more and more attention, but also ethical-sustainable investments are becoming more and more important.
The aim was to examine how and in what form an independent value-based investment policy could be derived from the 19th century onwards, based on an ethical and sustainable investment principle with a Catholic orientation. The starting point was the tension between the Church’s self-image as a moral institution and its role as an actor on the capital markets in the sphere of financial market law. The church investment policy was reconstructed from the 19th century onwards, more precisely from the period of secularization, which fundamentally changed the church’s asset management. The basis for the evaluation is on the one hand the ecclesiastical self-claim, which among other things is set out in the Catholic social teachings, and on the other hand the foundations of sustainable investments. These principles have developed in leaps and bounds (also) outside the religious milieu since the Brundtland Report of 1987 up to the current issues of the goals of sustainable development (SDG) and the ESG criteria. In subsumption, it has thus been possible to develop an ethical and sustainable investment principle with a Catholic orientation and also to establish corresponding test criteria.
On the basis of this investment principle, the collective investment schemes that are advertised as value-based in the German-speaking countries were then examined in detail. The goal and challenge was thus to examine the extent to which these thus defined investments can exist in the area of conflict between confessional credibility and economic necessity, and to what extent they differ from classic ethical-sustainable financial investments.
Church (institutional) investors are like the classical private investors due to the predominant information asymmetries, the necessary risk dispersion in the plant itself and the lack of professionalism in financial affairs hardly able to realize the developed ethical-sustainable investment principle with catholic adjustment by purposeful single investments. The specific investment of assets therefore also requires special legal and organizational regulations as a framework condition. The instrument of collective capital investments (investment funds) is available for this purpose. In asset management, economies of scale can be realized and value-based investment criteria in a so-called theme fund can be guaranteed
The structure of investment funds is developed in detail and the history of investment funds up to European regulation as well as the development of investment funds under European Union law are considered. The investment policy is explained as the basis for investment with the general-abstract investment limits and the collective-concrete investment principles. In this context, it is explained how a value-based investment policy with an advisory board as an advisory body can be taken into account and which risks (keyword de facto fiscal unity) must be considered from a regulatory point of view. Also of interest to the practitioner is the description of the structure of a collective investment scheme with value-based investment, which can also be used for other theme-based investment funds in the structure described.
The empirical analysis and the assessment of investment funds with a claimed value-based orientation were finally carried out using a tool developed specifically for this purpose. This financial-mathematical working tool not only enables the examination of investment funds with regard to sustainable and economic criteria, but also ethical criteria can be included as an equal factor. Thus, the faith-based characteristics, the sustainability criteria as well as the financial ratios are covered and classified as a uniform factor for the assessment of assets according to Catholic guidelines (CFF). The work concludes with the conclusions and the outlook and is supplemented by an extensive appendix.
Lötscher, Marcel (2020); Prinzipien der katholischen Vermögensanlage, Ethisch-nachhaltige Anlagegrundsätze im Spannungsfeld von Religion und Ökonomie; Nomos-Verlag.